UBS analyst sees iPhone creating "halo 2" for Apple

Apple, Inc.'s launch of the iPhone is the catalyst for a second halo effect that will spur the company's core iPod and Mac businesses, says analyst Ben Reitzes of UBS Investment Research.

The researcher's note to investors in the wake of Apple's Q307 report observed that Apple's high-intensity promotional campaign for the iPhone was likely to repeat the effect the iPod has had on the Mac maker's computer sales in the near future, luring customers into stores once again and in some cases persuading them to buy the very iPods that were responsible for the previous halo.

"We believe investors should focus on Apple being in the process of creating another version of the 'multiplier effect,' which we call 'Halo 2,'" Reitzes said. "We believe the build up to the launch of the iPhone and its ongoing excitement is driving sales of accessories, boosting retail traffic, and helping drive sales of iPods and especially Macs."

Worries about potentially low iPhone sales were "overblown,'" he added, noting that Apple was able to sell its new cellphones far faster than AT&T could activate them during the initial 30 hours and that the European iPhone launch details, plus Apple's recently updated MacBooks, would help the company grow through the end of the year.

Reitzes also emphasized that upcoming product releases were wild cards that Apple could play to its advantage and beat estimates. Mac OS X Leopard's introduction in October would be a clear factor, he said. But it could be unknown devices released over the summer, rather than currently publicized releases, that drove sales beyond current expectations.

"We are particularly excited about a possible iMac redesign," he wrote. "In addition, we continue to believe Apple may be working on some kind of 'ultra-portable PC' or some kind of device that can bridge the gap between media playing, basic wireless computing needs, and even some type of gaming."

The analyst also predicted that sweeping changes to Apple's staple iPod lines could reinforce the electronics firm's growth. A video iPod with a large touchscreen and iPod nanos with increased storage were probable, he claimed. Additional iPhone models and iTunes movie rentals weren't anticipated but were mentioned as possible boosts to Apple's profits if they appear in the near term.

UBS reflected the positive outlook with a new "buy" rating and raised the target share price from $160 to $175.

A lot of this "halo" depends on how good the Apple sales people are at taking iPhone interest and turning it into a Mac sale. Apple also needs to copy the iPhone ads and show a Mac actually doing something. Granted those iPhone ads worked because of the user interface being so different and the fact that you could do all those things on your phone, but it shouldn't be too hard to make a more interesting than the current Hi I'm a PC/Mac ads.

A lot of this "halo" depends on how good the Apple sales people are at taking iPhone interest and turning it into a Mac sale. Apple also needs to copy the iPhone ads and show a Mac actually doing something. Granted those iPhone ads worked because of the user interface being so different and the fact that you could do all those things on your phone, but it shouldn't be too hard to make a more interesting than the current Hi I'm a PC/Mac ads.

The most intelligent post i've read in some time. YES, show the Mac for what it can do. Start showing its features as well as iLife. How to start a DVD in the time it takes to make this commercial.

I took my bosses vacation pics/video, edited them, made a DVD with menus, and a website in about an hour. Of course less time if i was not at work doing my day job also!!!

I think its clear that the new iPods are going to be major for Apple - for the last two years or so they've really only been tinkering with the design - while they've really been working on these new iPods. Can't wait to see them

i am waiting for the movie rentals, but I am afraid we may have to wait until next year.

The Halo affect from the iPhone will be huge, but we will see it kick in high gear in 2010.

so in the mean time just keep buying aapl while it is still cheap under $300 a share.

Even thought Apple refers to AppleTV as a hobby, It's clear that they expect it to be yet another halo for selling Macs. But we have to wait until we can get the MPAA on board. I am confident that Jobs will have his way eventually, but come on, I've been waiting way to long.

Quote:

Originally Posted by MiMiC

The most intelligent post i've read in some time. YES, show the Mac for what it can do. Start showing its features as well as iLife. How to start a DVD in the time it takes to make this commercial.

I took my bosses vacation pics/video, edited them, made a DVD with menus, and a website in about an hour. Of course less time if i was not at work doing my day job also!!!

This *is* the power of Apple and needs to be shown.

Perhaps I am short-sided but I don't that is a good idea. The differences between the iPhone's multi-touch interface and other phone UIs is extreme.

The difference between a Mac and PC is not. While OS X is much more refined and intuitive, I don't see how these could come across well in a 30 second time slot.

I think this is why the "I'm A Mac" commercials are the way it are. The Apple Stores have been great for introducing people to the Mac, I think the iPod "halo" pales in comparison to the Apple Store "halo".

For this reason I think Best Buy stores with Apple "tables" will be very effective in finding switchers. because all an interested party has to do is experience the Mac for 2 minutes to be able to make a decision. I can't tell you how many hardcore Windows that I know personally--and made fun of my Mac--are now Mac users from give it a go in an Apple Store.

If you have a half dozen ideas for commercials that showcase OS X and it's native apps I'd love to hear them. I'm not saying it's not possible, I'm saying I can't picture it. I have been known to be wrong. Though that was 1984 when I invested heavily in the zipper industry. Damn you Jacko!